Fitch Ratings has upgraded the credit ratings of Greece’s four systemic banks, the National Bank of Greece, Piraeus Bank, Alpha Bank, and Eurobank. This upgrade reflects the improved assessment of Greece’s operating environment, now rated at ‘BB+’.
Specifically, Fitch upgraded the credit ratings of the National Bank of Greece and Eurobank to BB+ from BB, and the ratings of Alpha Bank and Piraeus Bank to BB from BB-. All four banks have been assigned a positive outlook.
“We expect the Greek economy to continue to outperform the eurozone average. Paired with falling unemployment and the deployment of the country’s Recovery and Resilience Fund, this should support banks’ ability to capture profitable business opportunities”, says Fitch.
Fitch upgrades NBG to ‘BB+’; Outlook positive
Fitch Ratings has upgraded National Bank of Greece (NBG) long-term issuer default rating (IDR) to ‘BB+’ from ‘BB’, on Wednesday. The outlook is positive. The upgrade mainly reflects Fitch’s improved assessment of Greece’s operating environment (OE) to ‘bb+’.
The upgrade also reflects continued improvements in NBG’s standalone credit profile, including a further reduction in the stock of problem assets (which include nonperforming exposures (NPEs) and net foreclosed assets) and healthy profitability resulting in capital accumulation.
The Positive Outlook reflects Fitch’s expectation that its OE assessment could improve further if the positive macroeconomic trends continue and result in satisfactory business opportunities for banks. A higher OE score could have a positive impact on our assessment of most of NBG’s key VR drivers.
NBG’s ratings reflect its strong position within the Greek domestic market, which supports its business and profitability prospects, stable deposit-based funding and sound liquidity. The ratings also reflect above-sector average capital ratios and low capital encumbrance from unreserved problem assets.
Fitch’s vote of confidence in Greece’s economy
Fitch Ratings, seen as the strictest and most robust rating agency, gave a vote of confidence in the Greek economy in December 2023 by upgrading the Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BBB-‘ from ‘BB+’.
Fitch was the fourth rating house to upgrade the investment in Greek bonds after Scope Ratings in August, DBRS in September, and S&P in October of 2023.
The main drivers for the upgrade, according to Fitch’s announcement, were the favorable dynamics of the Greek debt, the commitment to fiscal adjustment, resilient growth, policy continuity, and the improvement of the banking system.
The Fitch Ratings upgrade indicated that Greece’s economy was on an upward path as regards to government policies. It also opened new perspectives for foreign investment.
